Chapter 17. Industrial Supremacy

With a stride that astonished statisticians, the conquering hosts of business enterprise swept over the continent; twenty-five years after the death of Lincoln, America had become, in the quantity and value of her products, the first manufacturing nation of the world. What England had accomplished in a hundred years, the United States had achieved in half the time." So wrote the historians Charles and Mary Beard in the 1920s, expressing the amazement many Americans felt when they considered the remarkable expansion of their economy in the late nineteenth century.

In fact, America's rise to industrial supremacy was not as sudden as some observers believed. The nation had been building a manufacturing economy since early in the nineteenth century; industry was well established before the Civil War. But Americans were clearly correct in observing that the accomplishments of the last three decades of the nineteenth century overshadowed all the earlier progress. Those years witnessed nothing less than the transformation of the nation.

Many factors contributed to this dramatic industrial growth. The United States had an abundance of basic raw materials and energy sources: coal, iron, timber, petroleum, water power, and more. There was a large and growing supply of labor, the result of two great migrations: the movement of American farmers into the cities and the movement of European peasants across the ocean to the nation's industrial centers. American industry benefited as well from a remarkable technological inventiveness— widely heralded as "Yankee ingenuity"—which created the necessary machinery for industrial growth.

A talented, energetic, and ambitious group of entrepreneurs—known by some as "captains of industry" and by others as "robber barons"—developed new financial and administrative structures capable of organizing large-scale production and distributing manufactured goods to a national market. And the market itself was growing as a result of population growth, the new railroad network, and a host of new marketing techniques. Finally, the federal government worked to promote economic growth. It resisted pressures to interfere with the prerogatives of capitalists, and it worked at the same time to promote corporate growth. It made public resources available for private exploitation on generous terms; it erected protective tariff barriers against foreign competition; it established a new banking and currency system; and it provided direct subsidies of land and money.

The remarkable growth that resulted from these factors did much to increase the wealth and improve the lives of many Americans. But such benefits were far from equally shared. While the industrial titans and a growing middle class were enjoying a prosperity without precedent in the nation's history, workers, farmers, and others were experiencing an often painful ordeal that slowly edged the United States toward a great economic and political crisis.

Sources of Industrial Growth

Virtually all the forces that contributed to American economic growth were in operation in some form before the Civil War. But there were other forces at work in those years to inhibit economic development. Perhaps most important, conservative Southern planters, exercising great political power, had served as an obstacle to governmental policies favoring Northern capitalists. The years of war and Reconstruction removed that obstacle, as well as others. And in the 1870s and 1880s, the forces of economic progress took on renewed strength.

Industrial Technology

No one factor can be called the most important prerequisite of industrial growth. Indeed, industrialization depends above all on the working together of many forces at once. But one of the most important of such forces, certainly, is the emergence of new technologies and the discovery of new materials and productive processes. In the last decades of the nineteenth century, inventions appeared at a dizzying pace. In the entire history of the United States up to 1860, only 36,000 patents had been granted. For the period from 1860 to 1890, the figure was 440,000.

Many of the postwar inventions and discoveries were in the field of communication. In 1866, Cyrus W. Field succeeded in laying a transatlantic telegraph cable to Europe. During the next decade, Alexander Graham Bell developed the first practicable telephone; and by the 1890s, the American Telephone and Telegraph Company, which handled his interests, had installed nearly half a million instruments in American cities. Other inventions that speeded the pace of business organization were the typewriter (by Christopher L. Sholes in 1868), the cash register (by James Ritty in 1879), and the calculating or adding machine (by William S. Burroughs in 1891).

The technological innovation that probably had the most revolutionary effect on industry and on the lives of the urban masses was the introduction in the 1870s of electricity as a source of light and power. Among the several men who pioneered this development were Charles F. Brush, who devised the arc lamp for street illumination, and Thomas A. Edison, who invented, among many other electrical devices, the incandescent lamp (or light bulb), which could be used for both street and home lighting. Edison and others designed improved generators and built large power plants to furnish electricity to whole cities. Before the turn of the century, 2,774 power stations were in operation, and some 2 million electric lights were in use in the country. Electric power was by then becoming commonplace in street railway systems, in the elevators of urban skyscrapers, and in factories.

Another important technological breakthrough was the development of steel. A process by which iron could be transformed into steel—a much more durable and versatile material—had been discovered simultaneously in the 1850s by an Englishman, Henry Bessemer, and an American, William Kelly. (The process consisted of blowing air through molten iron to burn out the impurities.) After the Civil War, the new process transformed the metal industry; and in 1868, another method of making steel—the open-hearth process, introduced from Europe by the New Jersey ironmaster Abram S. Hewitt—made an appearance as well. Together, these techniques made possible the production of steel in great quantities and in large dimensions, thus facilitating use of the metal for the production of locomotives, steel rails, and ultimately, heavy girders for the construction of tall buildings.

The steel industry emerged first, unsurprisingly, where the iron industry already existed, in western Pennsylvania and eastern Ohio—a region where iron ore and coal were abundant. Pittsburgh quickly became the center of the steel world. But the rapid growth of the industry soon stimulated the development of new sources of ore in other areas. The mines of the upper peninsula of Michigan were furnishing over half of the supply by the 1870s. Beginning in the 1890s, the extensive Mesabi range in Minnesota developed into the greatest ore-producing region in the world. Another rich source was discovered around Birmingham, Alabama. Eventually new centers of production emerged closer to the new sources of ore and coal: Cleveland and Lorain in Ohio; Detroit, Chicago, and Birmingham.

The petroleum industry emerged in the late nineteenth century largely in response to the steel industry's need for lubrication for its machines. (Not until later did oil become important primarily for its potential as a fuel.) Many Americans had been aware for some time of the existence of petroleum reserves in western Pennsylvania, where oil often seeped to the surface of streams and springs. At first, however, no one was quite sure what it was or what to do with it. (Some charlatans bottled it and sold it as a patent medicine.) In 1855, however, the Pennsylvania businessman George H. Bissell sent a sample of oil to Professor Benjamin Silliman of Yale for analysis. Silliman told him that the substance could be used for lighting purposes and that it would also yield such products as paraffin, naphtha, and lubricating oil.

Convinced now that oil had commercial possibilities, Bissell raised money to begin drilling; and in 1859, Edwin L. Drake, one of Bissell's employees, established the first oil well near Titusville, Pennsylvania, which was soon producing 500 barrels of oil a month. Skeptics called the well "Drake's folly," but demand for petroleum grew quickly enough to precipitate an oil rush. Promoters began to develop other fields in Pennsylvania, Ohio, and West Virginia. By the 1870s, nearly 40 million barrels of petroleum had been produced; oil had advanced to fourth place among the nation's exports; and annual production was approaching 20 million barrels.

New technologies and materials similarly transformed other industries. The refrigerated freight car made possible the expansion of the great meatpacking organizations of Gustavus Swift, Philip Armour, and others. New ways of milling flour made possible the emergence of large milling companies in the Midwest (and particularly in Minnesota). New methods of canning foods and condensing milk helped establish the prepared-foods industry under the leadership of Gail Borden and others.

By the beginning of the twentieth century, the new technology was leading to even greater advances. There were early experiments in communication by radio conducted by the Italian inventor Guglielmo Marconi in the 1890s. There were the first steps toward the development of the airplane—the famous flight by the Wright brothers at Kitty Hawk, North Carolina, in 1903. But of more immediate importance was the development of the automobile. In the 1870s, designers in France, Germany, and Austria— inspired by the success of railroad engines—were already beginning to develop engines that might drive independently controlled vehicles. They achieved early successes with an ''internal combustion engine," which used the expanding power of burning gas to drive pistons; and with this new engine, they created the first automobiles—essentially traditional carriages fitted with their own source of power to replace the horse.

Meanwhile, in the United States, inventors such as Charles and Frank Duryea, Elwood Haynes, Ransom Olds, and Henry Ford were designing their own automobiles. The Duryeas built and operated the first gasoline-driven motor vehicle in America in 1903. (Earlier American cars had used other, cruder fuels.) Three years later, Ford produced the first of the famous cars that would bear his name. In 1898, the first automobile advertisement appeared in Scientific American, under the headline: "Dispense With a Horse." The first automobile showroom opened in New York in 1901. By 1900, automobile companies were turning out more than 4,000 cars a year. A decade later— when manufacturers were finally able to streamline operations so as to bring the cost down, and when American roads began to be improved to make extensive automobile traffic possible—the industry had become a major force in the economy, and the automobile was beginning to reshape American social and cultural life. In 1895, there had been only four automobiles on the American highways. By 1917, there were nearly 5 million.

The Science of Production

Central to the growth of the automobile and other industries were advances in the science of production. Convinced that a modern economy required modernization of the manufacturing process, industrialists by the turn of the century were turning in growing numbers to the new principles of "scientific management." The leading force behind the new science was Frederick Winslow Taylor.

Taylor's ideas were controversial during his lifetime, and they have remained controversial ever since. Taylor himself, and his many admirers, argued that scientific management was an essential prerequisite to an efficient, modern economy. It was a way to manage human labor to make it compatible with the demands of the machine age. But scientific management had another purpose as well, which made it far less appealing to many workers. It was a way to increase the employer's control of the workplace, to make working people less independent.

Taylor's first experiments were targeted not at machine operators but at manual laborers. Among other things, he urged employers to reorganize the production process by subdividing tasks. This would be a way to speed up production; it would also make workers more interchangeable and thus diminish a manager's dependence on any particular employee. But Taylor's ideas found their greatest influence in industries where machinery was becoming central to production. The new technology, Taylor argued, would be of little use unless workers could be trained to operate the machinery efficiently and effectively. If properly managed, he argued, fewer and fewer workers could perform simpler tasks at infinitely greater speed, greatly increasing productive efficiency. They would also be easier to control if they could be made part of a scientifically designed process of production rather than left in control of the process themselves. Not until well into the new century—indeed not until the 1920s—did the influence of what became known as "Taylorism" reach its fullest extent. But the impulse behind it—the attempt to bring to the performance of workers the same scientific standards that industrialists were bringing to the creation of new technologies—was affecting industry much earlier than that.

Manufacturers also began placing greater emphasis on industrial research. In part because of the phenomenal success of Thomas Edison's famous industrial laboratory in Menlo Park, New Jersey, dozens of corporations were, by the early years of the twentieth century, establishing laboratories of their own. By 1913, Bell Telephone, Du Pont, General Electric, Eastman Kodak, and about fifty other companies were budgeting hundreds of thousands of dollars each year for research by their own engineers and scientists.

Out of all the new methods and machines emerged the greatest triumph of production technology: mass production and, above all, the moving assembly line, which Henry Ford introduced in his automobile plants in 1914. This revolutionary technique cut the time for assembling a chassis from twelve and a half hours to one and a half hours. It enabled Ford to raise the wages and reduce the hours of his workers while cutting the base price of his Model T from $950 to $290. And it served as an example for many other industries.

Railroad Expansion

The principal agent of industrial development in the late nineteenth century was the expansion of another transportation system: the railroads. Railroads promoted economic growth in many ways. As the nation's principal method of transportation, they made possible the expansion of genuinely national commerce by giving industrialists quick and relatively inexpensive access to distant markets and distant sources of raw materials. As the nation's largest businesses, the railroads created new forms of corporate organization that served as models for other industries. And as America's biggest investors, they stimulated economic growth through their own enormous expenditures on construction and equipment.

Even before the Civil War, railroads had been the most important single economic interest in the United States. In the years that followed, their importance grew still further. Every decade, the total railroad trackage increased dramatically: from 30,000 miles in 1860, to 52,000 miles in 1870, to 93,000 in 1880, to 163,000 in 1890, and to 193,000 at the turn of the century. Along with the extension of lines came improvements in technology that made railroad travel safer and more efficient: steel rails, heavier locomotives and cars, uniform track gauge, wider roadbeds, and perhaps most important, new braking systems (first introduced by George Westinghouse) that reduced the danger of derailments and pileups.

Government subsidies—those by the federal government to support the transcontinental lines and those by state and local governments to encourage subsidiary routes—were vital to these vast undertakings, which required far more capital than private entrepreneurs could raise by themselves. Equally important, perhaps, was the emergence of great railroad corporations—the first large economic combinations—which brought a vast proportion of the nation's rails under the control of a very few men. Among the earliest such combinations was the Pennsylvania Railroad. It was one of the first companies to combine a large number of short lines under the direction of a single management. It also introduced a new system of administration—by trained managers who ran the company efficiently. Profits still went to the stockholders; but the actual running of the company was lodged in the hands of people who were not necessarily owners.

Other railroad combinations, however, saw owners continue to play a central role in management through the last decades of the nineteenth century: the vast New York Central empire of Cornelius Vanderbilt (a former steamship owner widely known as "the Commodore"), for example; or the Erie Railroad, controlled by the unscrupulous speculators Daniel Drew, Jay Gould, and James Fisk, whose self-serving exploitation of the company ultimately led to disaster. Indeed, these and other railroad tycoons— James J. Hill, Collis P. Huntington, and others— became symbols to much of the nation of great economic power concentrated in a single individual. But railroad development was less significant for the individual barons it created than for its contribution to the growth of a new institution: the modern corporation.

The Corporation

There had been corporations in America since colonial times: organizations chartered by governments and charged with running such public facilities as bridges, roads, and banks. But the corporation in the modern sense of the word emerged only after the Civil War. By then, railroad magnates and other industrialists were realizing that many of the great ventures they envisioned could not be financed by any single person, no matter how wealthy, nor even by any single group of partners.

Under the laws of incorporation, business organizations could raise money by selling stock to members of the public; and in the decades after the Civil War, one industry after another adopted this practice of financing its undertakings. The phenomenon of people investing in businesses with which they had no direct connection was almost entirely new. What made the practice appealing was the new idea that investors had only "limited liability"—that is, investors risked only the amount of their investments; they were not liable for any debts the corporation might accumulate beyond that point. Suddenly, it became possible for entrepreneurs to gather vast sums of capital and undertake great projects.

The new type of corporation quickly spread beyond the railroad industry to other areas of the economy. In steel, the central figure was Andrew Carnegie, a Scottish immigrant who had worked his way up in the railroad industry. In 1873, he opened his own steelworks in Pittsburgh; and in the following decades, he expanded his company to a place of dominance in the industry. His methods were much like those of other rising industrial titans. From the railroads, he obtained rebates on his shipments so that he could cut his costs and hence his prices. He bought out rival concerns that could not meet his competition. He set up—in collaboration with his able associate Henry Clay Frick—a carefully integrated system that enabled him to control the processing of steel from mine to market. His company bought up coal mines and leased part of the Mesabi range, operated a fleet of ore ships on the Great Lakes, and acquired railroads. He financed his undertakings not only out of his own profits but out of the sale of stock. Then, in 1901, he sold out to the banker J. Pierpont Morgan, who merged the Carnegie interests with others to create the giant United States Steel Corporation—a $1.4 billion enterprise that controlled almost two-thirds of the nation's steel production. A similar process, although usually on a more modest scale, was at work in other industries. Gustavus Swift developed a relatively small meatpacking company into a great national corporation, in part because of profits earned during the Civil War,

in part because of his success in attracting investors in the years after the war. Isaac Singer had patented a sewing machine in 1851 and created—in I. M. Singer and Company—one of the first modern manufacturing corporations.

It was not simply the accumulation of capital that characterized the new organizations. It was also a new approach to management. Large, national business enterprises needed more systematic administrative structures than the limited, local ventures of the past. As a result, corporate leaders introduced a set of managerial techniques—the genesis of modern business administration—that relied on the division of responsibilities, a carefully designed hierarchy of control, modern cost-accounting procedures, and perhaps above all a new breed of business executive: the "middle manager," who formed a layer of command between workers and owners. Beginning in the railroad corporations, these new management techniques moved quickly into virtually every area of large-scale industry.

Efficient administrative capabilities helped make possible another major feature of the modern corporation: consolidation. Railroad companies attempting to create a national network of lines had quickly discovered that combination—the joining of small local enterprises into huge national organizations—enabled them to move more quickly and efficiently toward their goals. Other industries attempting to take advantage of the expanding national markets for manufactured goods did likewise, creating giant industrial organizations.

Businessmen created these organizations through two primary methods. The first was "horizontal integration"—the combining of a number of firms engaged in the same enterprise into a single corporation. The consolidation of many different railroad lines into one company was an example. The second method, which became prevalent in the 1890s, was "vertical integration"—the taking over of the businesses on which a company relied for its primary function. Carnegie Steel, which came to control not only steel mills, but mines, railroads, and other enterprises, was an example of vertical integration.

The most celebrated corporate empire of the late nineteenth century was Standard Oil. The greatest consolidationist of the time, John D. Rockefeller, ãëåñø it together by using both methods. Beginning at the age of nineteen, when he became a partner in a Cleveland produce commission that earned great profits during the Civil War, Rockefeller displayed remarkable talents. Farsighted, acquisitive, and skilled at organization, he decided that his own economic future lay with the oil industry; and shortly after the Civil War, he launched a refining company in Cleveland (which he believed was destined to become a national center of the industry). From the beginning, he sought to eliminate his competition— especially the many small-scale companies that he believed were ruining the petroleum industry by introducing destabilizing competition. Allying himself with other wealthy capitalists, he proceeded methodically to buy out other refineries. In 1870, he formed the Standard Oil Company of Ohio, which in a few years had acquired twenty of the twenty-five refineries in Cleveland, as well as plants in Pittsburgh, Philadelphia, New York, and Baltimore.

So far, Rockefeller had expanded only horizontally. But soon he began expanding vertically as well. He built his own barrel factories and terminal warehouses and a network of pipelines that gave him control over most of the facilities for transporting petroleum. Standard Oil also owned its own freight cars and developed its own marketing organization, thus avoiding commissions to middlemen. By the 1880s, Rockefeller had established such dominance within the petroleum industry that to much of the nation he served as the leading symbol of monopoly.

Rockefeller and other industrialists saw consolidation as a way to cope with what many believed was the greatest curse of the modern economy: cutthroat competition. Businessmen insisted that they believed fervently in free enterprise and a competitive marketplace—but such beliefs often lasted only until they themselves were exposed to competition. Then they realized that the existence of too many competing firms in a single industry could spell instability and ruin for all, that a successful enterprise was one that could eliminate or absorb its competitors.

As the movement toward combination accelerated, new vehicles emerged to facilitate it. Again it was the railroads that moved first. They began with so-called pool arrangements—informal agreements among various companies to stabilize rates and divide markets (arrangements that would, in later years, be known as cartels). But the pools ultimately proved unworkable, especially after the economic panic of the 1890s began to wreak havoc on the railroads and other corporations. If even a few firms in an industry were unwilling to cooperate (as was almost always the case), the pool arrangements could not survive.

The failure of the pools raised demands for new, more rigorous techniques of consolidation—resting less on cooperation than on centralized control. At first, the most successful such technique was the creation of the "trust"—pioneered by Standard Oil in the early 1880s. Over time, the word trust became in popular discourse a term for any great economic combination. But the trust was in fact a particular kind of organization, one that soon became a common vehicle for consolidating railroads and other industries as well. Under a trust agreement, stockholders in individual corporations transferred their stocks to a small group of trustees (in the case of the Standard Oil trust, to men chosen and dominated by Rockefeller) in exchange for shares in the trust itself. Owners of trust certificates often had no direct control over the decisions of the trustees; they simply received a share of the profits of the combination. Thus while John D. Rockefeller officially owned only a few refinery companies, he managed through the mechanism of the trust to extend his reach over a vast range of enterprises.

An even greater master of the trust was J. P. Morgan. In theory, Morgan was simply a bank president. In reality, he dominated scores of industrial organizations. Morgan's bank took control of one after another failing railroad line, reorganized it, and stabilized its operations. In the 1880s, he played a major role in saving the New York Central Railroad from collapse. Other railroads soon looked to Morgan (and such other banking firms as Kuhn Loeb and Company) for assistance. In the decades that followed, a similar system extended into other industries as well.

A third form of consolidation, closely related to the trust, began to emerge in the 1890s. In 1889, the state of New Jersey—followed later by many other states—changed its laws of incorporation to permit companies actually to buy up other companies. That made the cumbersome vehicle of the trust unnecessary and permitted actual mergers. Rockefeller quickly relocated Standard Oil in New Jersey and created there what became known as a "holding company"—a central corporate body that would formally buy up the stock of various members of the Standard Oil trust and establish direct, formal ownership of the corporations in the trust. Many other corporations followed suit.

Corporate organization in the late nineteenth century moved, therefore, through several stages on the way to establishing the modern system of business consolidation. It began with efforts to control competition and reduce instability by creating loose, informal pool arrangements, or cartels. It then moved to the more effective, but still awkward, trust arrangement. And then, in the 1890s, it took the final step of creating formal corporate structures controlling vast enterprises—holding companies. As a result, by the end of the nineteenth century 1 percent of the corporations in America were able to control more than 33 percent of the manufacturing. A congressional investigation disclosed in 1913 that Rockefeller and Morgan controlled between them companies valued at more than $22 billion. What was emerging, in other words, was a system of economic organization that lodged enormous power in the hands of a very few men—the great bankers of New York, industrial titans such as Rockefeller (who himself gained control of a major bank), and others.

Whether or not the ruthless concentration of economic power was the only way (or the best way) to promote industrial expansion became a major source of debate in America in the late nineteenth century and beyond. But it is clear that the industrial giants of the era were reponsible for substantial economic growth. They were integrating operations, cutting costs, creating a great industrial infrastructure, stimulating new markets. They were opening the way to large-scale mass production. Perhaps without realizing it, they were building the foundations of a great economic society. They were also creating the basis for some of the greatest public controversies of their era.

Capitalism and Its Critics

The rise of big business depended not only on technology, transportation, and organization, but on an ideology of growth and progress. Industrialists and financiers in the last decades of the nineteenth century developed a complex and wide-ranging rationale for their methods and power. And while this new set of ideas was in large part meant simply to justify what already existed, it also became a positive force, spurring others to greater efforts.

The new business philosophy was not without its critics. Farmers and workers were the most strident opponents, seeing in the growth of the great new corporate power centers a threat to their traditional notions of a republican society in which wealth and authority were widely distributed. The new economy, they argued, was eroding the opportunities for individuals to advance in society; it was stifling mobility. Middle-class critics pointed to the corruption that the new industrial titans seemed to produce, not only in their own enterprises but in local, state, and national politics as well. Even many businessmen were critical of the system and charged that the large corporations were not yet sufficiently modernized, that their methods were wasteful and inefficient.

The growing criticisms presented the captains of industry with a challenge. They not only had to build the new corporate economy. They had to legitimize it. They had to find a way to convince the public (and themselves) that the new structures they were creating were compatible with the ideology of individualism and equal opportunity that were so central to American life. Their efforts were never entirely successful. Critics continued to assail corporate power and to attract widespread popular support for their positions. But the philosophy of big business had a powerful impact nevertheless—not only among industrialists themselves, but among large groups of the American population.

The "Self-Made Man"

An important part of the emerging philosophy of capitalism rested squarely on the older ideology of individualism. The new industrial economy, its defenders argued, was not shrinking opportunities for individual advancement. It was expanding those opportunities. It was providing every individual with a chance to succeed and attain great wealth.

There was an element of truth in such claims, but only a small element. Before the Civil War there had been few millionaires in America; by 1892 there were more than 4,000 of them. Most of the new business tycoons had begun their careers from comfortable and privileged positions on the economic scale. But some—enough to invest the entire group with the aura of the American success story—had emerged from obscurity to riches. Andrew Carnegie had worked as a bobbin boy in a Pittsburgh cotton mill; James J. Hill had been a frontier clerk; John D. Rockefeller had started out as a clerk in a Cleveland commission house; and E. H. Harriman had begun as a broker's office boy. Some millionaires, in other words, were in fact what nearly all claimed to be: "self-made men."

And yet their rise to power and prominence was not always a result simply of hard work and ingenuity. It was also a result of ruthlessness and, at times, rampant corruption. Cornelius Vanderbilt expressed the attitude of many of his fellow tycoons with the belligerent question: "Can't I do what I want with my own?" So did his son William, in a much-quoted-statement: "The public be damned." Once, when the elder Vanderbilt's lawyers warned him that a move he contemplated was illegal, he bellowed: "What do I care about the law? Hain't I got the power?" Not all tycoons were as openly contemptuous of the public and the laws as the Vanderbilts at times seemed to be. But many displayed a similar belief that their own activities were somehow exempt from normal restraints.

Industrialists showed little restraint, certainly, in their efforts to get what they wanted from the political system. They made large financial contributions to politicians and to political parties. They presented gifts of stock and cash to public officials in exchange for support. And more often than not, state and local governments responded to these tactics by doing the industrialists' bidding. Cynics said that Standard Oil did everything to the Ohio legislature except refine it. On one occasion a member of the Pennsylvania legislature was reported to have said: "Mr. Speaker, I move we adjourn unless the Pennsylvania Railroad has some more business for us to transact." During the notorious "Erie War" of 1868, in which Cornelius Vanderbilt did battle against Jay Gould and Jim Fisk for control of the Erie Railroad, both sides in the dispute offered lavish bribes to members of the New York State legislature to support measures favorable to their cause. The market price of legislators during the fight was $15,000 a head. One influential and enterprising leader collected $75,000 from Vanderbilt and $100,000 from Gould. The corruption was not all on one side. Politicians were not innocent victims. Many of them openly demanded bribes and in effect blackmailed businessmen.

The average industrialist of the late nineteenth century was not, however, a Rockefeller or a Vanderbilt, but a more modest entrepreneur engaged in highly risky ventures in an unstable economy. For every successful millionaire, there were dozens of aspiring businessmen whose efforts failed in the face of overexpansion or vicious competition. Some industries fell under the control of a single firm or a small group of large firms. But far more industries remained fragmented, with many small companies struggling to carve out a stable position for themselves in an uncertain environment. The annals of business did indeed include real stories of individuals rising from rags to riches. They also included stories of people moving from riches back to rags.

Survival of the Fittest

Most tycoons liked to claim that they had attained their wealth and power through hard work, acquisitiveness, and thrift—the traditional virtues of Protestant America. Those who succeeded, they argued, deserved their success. "God gave me my money," explained John D. Rockefeller, expressing the assumption that riches were a reward for worthiness. On the other hand, those who failed had earned their failure—through their own laziness, stupidity, or carelessness. "Let us remember," said a prominent Protestant minister, "that there is not a poor person in the United States who was not made poor by his own shortcomings."

Such assumptions became the basis of a social theory popularized by a number of leading intellectuals of the late nineteenth century: Social Darwinism, the application to human society of Charles Darwin's laws of evolution and natural selection among species. Just as only the fittest survived in the process of evolution, so in human society only the fittest individuals survived and flourished in the marketplace.

The English philosopher Herbert Spencer was the first and most important proponent of this theory. Struggle, Spencer argued, was a normal human activity, especially in economic life. The weak failed; the strong endured and became stronger. Society benefited from the elimination of the unfit and the survival of the strong and talented. In the end, the competitive process would lead to what Spencer called "the ultimate and inevitable development of the ideal man."

Spencer's books were enormously popular in America in the 1870s and 1880s. And his teachings found prominent supporters among American intellectuals, most notably William Graham Sumner of Yale, who promoted related ideas in a series of celebrated lectures, in magazine and journal articles, and finally in a famous 1906 book, Folkways. Sumner's philosophy did not always accord with Spencer's. But on one crucial point, he agreed fully with the ideas of Social Darwinism. Individuals, he argued, must have absolute freedom to struggle, to compete, to gratify their instinct for self-interest. The struggle for survival should be allowed to work itself out and should not be delimited by laws or the state.

The great financial titans themselves seized on the theories of Spencer and Sumner to justify their positions. "The growth of a large business is merely the survival of the fittest," Rockefeller proclaimed. "This is not an evil tendency in business. It is merely the working out of the law of nature and a law of God." Carnegie, who became the leading exponent of Social Darwinism among American industrialists, later described his reaction on first reading Spencer: "I remember that light came as in flood and all was clear."

Social Darwinism appealed to businessmen because it seemed to legitimize their success and confirm their virtues. It appealed to them because it placed their activities within the context of traditional American ideas of freedom and individualism. Above all, it appealed to them because it justified their tactics. Social Darwinists insisted that all attempts by labor to raise wages by forming unions and all endeavors by government to regulate economic activities would fail, because economic life was controlled by a natural law, the law of competition. And Social Darwinism coincided with another "law" that seemed to justify business practices and business dominance: the law of supply and demand as defined by Adam Smith and the classical economists. The economic system, they argued, was like a great and delicate machine functioning by natural and automatic rules, by the "invisible hand" of market forces. The greatest among these rules, the law of supply and demand, determined all economic values—prices, wages, rents, interest rates—at a level that was just to all concerned. Supply and demand worked because human beings were essentially economic creatures who understood and pursued their own interests, and because they operated in a free market where competition was open to all.

The ideas of Social Darwinism and classical economics provided an appealing ideology to justify business success and business tactics. It was not, however, an ideology that had very much to do with the realities of the corporate economy. At the same time that businessmen were celebrating the virtues of competition and the free market, they were making active efforts to protect themselves from competition and to replace the natural workings of the marketplace with control by great combinations. Vicious competitive battle—the thing that Spencer and Sumner celebrated and called a source of healthy progress—was in fact the very thing that American businessmen most feared and tried to eliminate.

Gospel of Wealth

Some businessmen attempted to temper the harsh philosophy of Social Darwinism with a more gentle, if in some ways equally self-serving idea: the "gospel of wealth." People of great wealth had not only great power but great responsibilities. It was their duty to use their riches to advance social progress. Carnegie himself elaborated on the idea in his 1901 book The Gospel of Wealth. People of wealth, he wrote, should consider all revenues in excess of their own needs as "trust funds" that they should administer for the good of the community; the person of wealth was "the mere trustee and agent for his poorer brethren." Carnegie did not believe in giving aid directly to the poor; he feared that such charity would encourage a sense of dependency. He preferred to contribute to institutions, notably libraries, that presumably would help the poor to help themselves. Carnegie was only one of many great industrialists who devoted large parts of their fortunes to philanthropic works.

The notion of private wealth as a public blessing existed alongside another popular concept: the notion of great wealth as something available to all. Russell H. Conwell, a Baptist minister, became the most prominent spokesman for the idea by delivering one lecture, ''Acres of Diamonds," more than 6,000 times between 1880 and 1900. Conwell told a series of stories, which he claimed were true, of individuals who had found opportunities for extraordinary wealth in their own backyards. One such story involved a modest farmer who discovered a vast diamond mine in his own fields in the course of working his land. "I say to you," he told his audiences, "that you have 'acres of diamonds' beneath you right here . . . that the men and women sitting here have within their reach opportunities to get largely wealthy. ... I say that you ought to get rich, and it is your duty to get rich." Most of the millionaires in the country, Conwell claimed (inaccurately), had begun on the lowest rung of the economic ladder and had worked their way to success. Every industrious individual had the chance to do likewise. Another promoter of the success story was Horatio Alger, a New York minister whose more than 100 novels—under such titles as Andy Grant's Pluck, Tom the Bootblack, and Sink or Swim—sold over 20 million copies. In every volume a poor boy from a small town went to the big city to seek his fortune. By work, perseverance, and luck, he became rich.

Alternative Visions

Alongside the celebrations of competition, the justifications for great wealth, and the legitimation of the existing order stood a group of alternative philosophies, many of which openly challenged the premises of Social Darwinism and the gospel of wealth.

One such philosophy emerged from the work of Lester Frank Ward, author of a number of notable books, beginning with Dynamic Sociology, published in 1883. Ward was just as much a Darwinist as Sumner and Spencer, but he drew very different conclusions about the implications of Darwinism for human society. Civilization, he argued, was not governed by the abstract laws of natural selection. It was controlled by human intelligence, which was capable of shaping society as it wished. The chief goal of modern society, therefore, should not be unrestrained freedom of action for every individual. It should be the pursuit of the general good through cooperative action. The best instrument for the attainment of that goal was government. In contrast to Sumner, who believed that state intervention to remodel the environment was futile, Ward thought that an active government engaged in positive planning was society's best hope. Ward's ideas coincided with those of a growing number of American thinkers who believed that "survival of the fittest" was a ruthless and inefficient system for achieving social progress. He helped promote the idea that institutions should be "functional," that they should work actively to meet social needs, that human welfare should not be left to the impersonal workings of the capitalist economy. The people, through their government, could intervene in the economy and adjust it to serve their needs.

Other Americans skeptical of the laissez-faire ideas of the Social Darwinists adopted more drastic approaches to reform. Relatively few Americans embraced genuinely radical challenges to the existing order; but some dissenters did raise fundamental questions about the viability of capitalism. Some of these dissenters found a home in the Socialist Labor party, founded in the 1870s and led for many years by Daniel De Leon, an immigrant from the West Indies. Other party leaders were recent immigrants from eastern Europe. Although De Leon attracted a modest following in the industrial cities, the party never succeeded in polling more than 82,000 votes. De Leon's theoretical and dogmatic approach appealed to intellectuals more than to workers, and a dissident faction of his party, eager to forge ties with organized labor, broke away and in 1901 formed the more enduring American Socialist party.

Other radicals gained a wider following. One of the most influential was Henry George. His angrily eloquent Progress and Poverty, published in 1879, was an immediate success; reprinted in successive editions, it became one of the ten best-selling nonfiction works in American publishing history. George tried to explain why poverty existed amidst the wealth created by modern industry. "This association of poverty with progress is the great enigma of our times," he wrote. "So long as all the increased wealth which modern progress brings goes but to build up great fortunes, to increase luxury and make sharper the contrast between the House of Have and the House of Want, progress is not real and cannot be permanent."

George blamed these social problems on the ability of a few monopolists to grow wealthy as a result of rising land values. An increase in the value of land, he claimed, was a result not of any effort by the owner, but of the growth of society around the land. This "unearned increment," this increase in the value of land resulting from increased demand rather than active improvement of the property by the owner, was rightfully the property of the community. And so George proposed a "single tax," to replace all other taxes, which would return the increment to the people. The tax, he argued, would destroy monopolies, distribute wealth more equally, and eliminate poverty. Single-tax societies sprang up in many cities; and in 1886, George, with the support of labor and the socialists, narrowly missed being elected mayor of New York.

Rivaling George in popularity was Edward Bellamy, whose Utopian novel Looking Backward, published in 1888, sold more than 1 million copies. It described the experiences of a young Bostonian who in 1887 went into a hypnotic sleep from which he awakened in the year 2000. He emerged from his trance to find a new social order, based on universal membership in a workers' army, where want, politics, and vice were unknown, and where everyone was happy and fulfilled. The new society had emerged from a peaceful, evolutionary process. The large trusts of the late nineteenth century had continued to grow in size and to combine with one another until ultimately they formed a single, great trust, controlled by the government, which absorbed all the businesses of all the citizens and distributed the abundance of the industrial economy equally among all the people. All aspects of life were organized with military efficiency. Society had become a great machine, "so logical in its principles and direct and simple in its workings" that it almost ran itself. "Fraternal cooperation" had replaced competition. Class divisions had disappeared. He labeled the philosophy motivating this vision "nationalism." Looking Backward had a remarkable impact. It inspired the formation of more than 160 Nationalist Clubs to propagate Bellamy's ideas. Bellamy himself devoted the remainder of his life to championing his brand of socialism.

The Problems of Monopoly

Relatively few Americans shared the views of those who questioned the entire structure of modern capitalism. But a growing number of people were by the end of the century becoming deeply concerned about a particular, glaring aspect of capitalism: the growth of monopoly.

From the beginning, large segments of the population had looked on the proliferation of business combinations with mistrust and hostility. The popular description of such men as Rockefeller, Carnegie, and Morgan as "robber barons" suggests the attitude of much of the public. So do the reports of the numerous conferences, commissions, and study groups that pointed with alarm to the effects of consolidation on the marketplace. The United States Industrial Commission reported in 1902 that "in most cases the combination has exerted an appreciable power over prices, and in practically all cases it has increased the margin between raw materials and finished products." Combinations were, in other words, the cause of artificially inflated prices; the influence of the free market was being restricted by the monopolistic practices of a few men. By the end of the century, a wide range of groups had begun to assail monopoly and economic concentration. Laborers, farmers, consumers, small manufacturers, conservative bankers and financiers, advocates of radical change—all joined the attack.

Defenders and opponents of combination alike looked with alarm at another problem of the modern economy: its disturbing pattern of instability. Although industrial output and agricultural production were expanding rapidly, other areas of the economy could not always keep pace. The nation's banks and financial institutions were neither strong enough nor efficient enough to meet adequately the new demands for their services. The increasingly important stock market was riddled with corruption. Above all, the market for goods was not growing as rapidly as the supply.

The result was one of the most troubling and distinctive features of modern industrial economy: a cycle of booms and busts that plagued American life throughout the late nineteenth and early twentieth centuries. Beginning in 1873, the economy fluctuated erratically, with severe recessions creating havoc every five or six years, each recession worse than the previous one, until finally, in 1893, the system seemed on the verge of total collapse.

One reason for the economic instability was that the new industries were not passing on enough of their profits to their workers to create an adequate market for the goods they were producing. This growing disparity in the distribution of wealth was producing not only an imbalance between supply and demand but a deep popular resentment. The standard of living may have been rising for virtually everyone, but the gap between rich and poor was visibly widening into an enormous chasm.

According to one estimate early in the century, 1 percent of the families in America controlled nearly 88 percent of the nation's assets. A small but conspicuous new class had emerged whose wealth almost defied description, whose fortunes were so vast that great feats of imagination were often required to enable them to be spent. Andrew Carnegie earned $23 million from his steel company in 1900 alone, and that was only part of his income (in an era in which there was as yet no income tax). John D. Rockefeller's personal wealth was estimated at one time to exceed $1 billion.

Some of the wealthy—Carnegie, for example— lived relatively modestly and donated large sums to philanthropic causes. Others, however, lived in a conspicuous luxury that earned the resentment of much of the nation. Like a clan of feudal barons, the Vanderbilts maintained, in addition to many country estates, seven garish mansions on seven blocks of New York City's Fifth Avenue. Other wealthy New Yorkers lavished vast sums on parties. The most notorious, a ball on which Mrs. Bradley Martin spent $368,000, created such a furor that she and her husband fled to England to escape public abuse.

Observing these flagrant displays of wealth were the four-fifths of the American people who lived modestly, and the one-eighth of the population (10 million people) who lived below the commonly accepted poverty line. To those in difficult economic circumstances, the sense of relative deprivation could be as frustrating and embittering as the poverty itself.

The Ordeal of the Worker

For the American worker, the experience of industrialization after the Civil War was similar in many ways to the experience before it. It was a mixed blessing. On the one hand, the average standard of living for laborers—in quantitative terms at least— rose significantly during the last decades of the nineteenth century. On the other hand, workers continued to suffer from the wide disparities in distribution of the nation's new wealth; from working conditions that were often arduous and unsafe; and from the intangible problems of adjusting to the impersonal character of work in the factory. Yet for workers, the late nineteenth century was also different from any previous era, if for no other reason than that their numbers were now much larger and the dimensions of both the promise and the problems of industrialization far greater.

The Immigrant Work Force

The dramatic expansion in the industrial work force, which was both a cause and a result of economic growth, arose out of a massive migration into industrial cities—immigration of two sorts. The first was the continuing flow of rural Americans into factory towns and cities—people disillusioned with or bankrupted by life on the farm and eager for new economic and social opportunities. The second was the great wave of immigration from abroad (primarily from Europe, but also from Asia, Canada, and other areas) in the decades following the Civil War—an influx that all but overshadowed all previous periods of immigration. The 25 million immigrants who arrived in the United States between 1865 and 1915 were more than four times the number who had arrived in the fifty years before. The greatest wave of new arrivals came after 1890; by the end of the first decade of the new century, immigrants were debarking in America at the rate of more than 1 million each year.

In the 1870s and 1880s, most of the immigrants came from the nation's traditional sources: England, Ireland, and northern Europe. Skilled artisans continued to emigrate from Great Britain to take advantage of the expanding opportunities in America.

Economic troubles in European industry in the 1880s induced factory workers from Sweden, Germany, and England to move to the United States. And the declining agricultural economy of northern Europe (and of Ireland, in particular) pressured still others to journey to America. By the end of the century, however, the major sources of immigrants had shifted, with large numbers of southern and eastern Europeans (Italians, Poles, Russians, Greeks, Slavs, and others) pouring into the country and into the industrial work force.

The new immigrants were coming to America in part to escape the poverty and oppression of their homelands. But they were coming as well because they felt the pull of the United States—a pull based in part on realistic expectations of the opportunities available, and in part on distorted and artificial promises. Railroads, in order to dispose of their Western landholdings, painted an alluring picture of America in advertisements overseas. Industrial employers actively recruited workers under the Labor Contract Law, which—until its repeal in 1885—permitted them to pay for the passage of workers in advance and deduct the amount later from their wages. Even after the repeal of the law, employers continued to encourage the immigration of unskilled laborers, often with the assistance of foreign-born labor brokers, such as the Greek and Italian padrones who recruited work gangs of their fellow nationals.

The arrival of these new ethnic groups became a complicating factor in the dynamics of the working class, which were already complicated enough. In addition to the traditional concerns about wages, working conditions, and the declining need for skilled artisans in the face of modern technology, there were now also serious ethnic tensions. Americans of old stock, as well as ethnics who had arrived a decade or so before, often looked on the new immigrants with fear and hostility. Industries that had traditionally been dominated by one national group now began to replace them with members of others—who could be hired at lower wages than the earlier workers. Poles, Greeks, and French Canadians began to displace the British and Irish workers in the textile factories of New England. Italians, Slavs, and Poles began to emerge as a major source of labor for the mining industry, which had traditionally been the province of native workers or northern European immigrants. Within industries, moreover, workers tended to cluster in particular occupations (and thus, often, at particular income levels) by ethnic group. In industry, at least, the idea of the "melting pot"—of Americans of different ethnic backgrounds melding together into one common culture—was of limited applicability.

Wages and Working Conditions

The average standard of living for workers may have been rising in the years after the Civil War; but for many laborers, the return for their labor remained pitifully small. It appeared even smaller in relation to the vast fortunes the industrial titans were accumulating—even in comparison with the rising incomes of the middle class. At the turn of the century, the average income of the American worker was $400-$500 a year—below the $600 figure that many believed was the minimum required to maintain a reasonable level of comfort. Nor did most workers enjoy any realjob security. The boom-and-bust cycle of the economy made laborers in all industries vulnerable; and in some areas, workers were particularly susceptible to losing their jobs because of technological advances or because of the cyclical or seasonal nature of their work. Even those who were spared unemployment could find their wages suddenly and substantially cut in hard times. Few workers, in other words, were ever very far from the prospect of poverty.

But American laborers faced a wide array of other hardships as well. There was, first, the painful adjustment to the nature of modern industrial labor: the performance of routine, repetitive tasks, often requiring little skill, on a strict and monotonous schedule. In 1900, most workers labored at least ten hours a day (twelve hours a day in the steel industry), six days a week. To rural men and women, accustomed to flexible and changing work patterns, the new routine was harsh and disorienting. To skilled artisans, whose once-valued tasks were now performed by machines, the new system was impersonal and demeaning. Factory workers were employed, moreover, in plants free from effective government regulation or inspection. The result was workplaces that were often appallingly unsafe or unhealthy. Industrial accidents were frequent and severe. Compensation to the victims, either from their employers or from the government, was limited.

Women and Children at Work

The reduction of skilled work in factories induced many employers to increase greatly the use of women and children, whom they could hire for lower wages than adult males. By 1900, 20 percent of all manufacturing workers were women; and 20 percent of all women (well over 5 million) were wage earners. Women worked in all areas of industry, even in some of the most arduous jobs—for example, as machinists, railroad workers, and stokers. Most women, however, worked in a few industries where unskilled and semiskilled machine labor (as opposed to heavy manual labor) prevailed. The textile industry remained the largest single employer of women.

Women worked for wages as low as $6 to $8 a week, well below the minimum necessary for survival (and well below the wages paid to men working the same jobs). Advocates of a minimum wage law for women created a sensation when they brought several women to a hearing in Chicago to testify that low wages and desperate poverty had driven them to prostitution. (It was not, however, sensational enough for the Illinois legislature, which promptly defeated the bill.)

Child labor, which had always existed in the United States, had by 1900 become a national scandal. At least 1.7 million children under sixteen years of age were employed in factories and fields, more than twice the number so employed thirty years before; 10 percent of all girls aged ten to fifteen, and 20 percent of all boys, held jobs. Under the pressure of outraged public opinion, thirty-eight state legislatures passed child labor laws in the late nineteenth century; but these laws were painfully insufficient. Sixty percent of child workers were employed in agriculture, which was typically exempt from the laws; and such children often worked twelve-hour days picking or hoeing in the fields. The laws were hardly more effective for children employed in factories; they set a minimum age of twelve years and a maximum workday of ten hours, but employers often ignored even these minimal standards. In the cotton mills of the South, children working at the looms all night were kept awake by having cold water thrown in their faces. In canneries, little girls cut fruits and vegetables sixteen hours a day. Exhausted children were particularly susceptible to injury while working at dangerous machines, and they were maimed and even killed in industrial accidents at an alarming rate.

Yet as much as the appalling conditions of many woman and child workers troubled the national conscience, conditions for men were at least equally dangerous. In mills and mines, and on the railroads, the American accident rate was higher than that of any industrial nation in the world. As late as 1907, an average of twelve railroad men a week died on the job. In factories, thousands of workers faced such occupational diseases as lead or phosphorus poisoning, against which employers took few precautions.

Emerging Unionization

Labor attempted to fight back against such conditions by adopting some of the same tactics their employers had used so effectively: creating large combinations. In the last three decades of the nineteenth century, American workers engaged in a series of escalating struggles to form and win recognition for labor unions. By the end of the century, however, their efforts had met with little success.

There had been craft unions in America, representing small groups of skilled workers, for many years; and their number increased significantly during and after the Civil War, Alone, however, the unions could not hope to exert significant power in the economy; and in the 1860s some labor leaders began to search for ways to combine the energies of labor organizations. The first attempt to federate separate unions into a single national organization came in 1866, when William H. Sylvis founded the National Labor Union—a polyglot association, claiming 640,000 members, that included a variety of reform groups having little direct relationship with labor. After the Panic of 1873 the National Labor Union disintegrated and disappeared.

The individual unions experienced stormy times in other ways during the hard years of the 1870s. With their bargaining power weakened by depression conditions, they faced antagonistic employers eager to destroy them and a hostile public unsympathetic to their demand for job security. When labor disputes with employers turned bitter and violent, as they occasionally did, the public instinctively blamed the workers (or the "radicals" and "anarchists" they believed were influencing the workers) for the trouble, rarely the employers. Particularly alarming to middle-class Americans was the emergence of the "Molly Maguires" in the anthracite coal region of Pennsylvania. The Mollies operated within the Ancient Order of Hibernians (an Irish fraternal society) and used terrorist tactics. They attempted to intimidate the coal operators through violence and occasionally murder; and they added to the growing perception that labor activism was motivated by dangerous radicals.

But excitement over the Molly Maguires was nothing compared to the near hysteria that gripped the country during the railroad strike of 1877. The trouble started when the principal Eastern railroads announced a 10 percent slash in wages. Immediately, railroad workers, whether organized or not, went out on strike. Rail service was disrupted from Baltimore to St. Louis, equipment was destroyed, and rioting mobs roamed the streets of Pittsburgh and other cities. As the strike continued, it began to take on many of the features of an open class war. State militias were called out against the strikers; and finally, in July, the president agreed to a request by the governor of West Virginia and ordered federal troops to suppress the disorders there. Clashes between workers and soldiers were frequent and often vicious. In Baltimore, eleven demonstrators died and forty were wounded in a conflict between workers and militiamen. In Philadelphia, state militia opened fire on thousands of workers and their families attempting to block the railroad crossings; twenty died. Similar (if less bloody) encounters occurred throughout the industrial United States (including a general strike in St. Louis). In all, over 100 people died before the strike finally collapsed several weeks after it had begun.

The great railroad strike was America's first major labor conflict and a vivid illustration of a new reality in the American economic system. With business becoming national in its scope, disputes between abor and capital could no longer be localized but could affect the entire nation. It was an illustration as well of the depth of resentment among many American workers and of the lengths to which they were prepared to go to express that resentment. It was an indication, too, of the serious weaknesses afflicting the labor movement, which still lacked an institutional base adequate to sustain its efforts. The failure of the strike seriously weakened the railroad unions and damaged the reputation of labor organizations in other industries as well.

The Knights of Labor

The first major effort to create a genuinely national labor organization was the founding in 1869 of the Noble Order of the Knights of Labor, under the leadership of Uriah S. Stephens. Instead of attempting to create a federation of preexisting unions, as the National Labor Union had done, the Knights recruited individual members directly from the working class. Membership was open to all who "toiled," and the definition of a toiler was extremely broad: The only excluded groups were lawyers, bankers, liquor dealers, and professional gamblers. Members met in local "assemblies"; an assembly might consist of the workers in a particular trade or a local union, or simply all the members of the Knights in a particular city or district. Presiding laxly over the entire order was an agency known as the general assembly. Much of the program of the Knights was as vague as the organization. Although they championed an eight-hour day and the abolition of child labor, the leaders were more interested in long-range reform of the economy than in the immediate objectives of wages and hours that appealed to the trade unions. Indeed, leaders of the Knights hoped to replace the "wage system" with a new "cooperative system," in which workers would themselves control a large part of the economy.

For several years, the Knights remained a secret fraternal organization and engaged in no public activities. But in the 1870s, it moved out into the open. Under the leadership of Terence V. Powderly, who was elected "grand master workman" in 1879, the order entered a spectacular period of expansion. By 1886, it claimed a total membership of over 700,000. Important factors contributing to the increase in numerical strength were a business recession in 1884 that threw many workers out of jobs and a renewal of industrial strife that induced unorganized laborers as well as some trade unions to affiliate with the Knights. Not only did the membership grow, but the order now included many militant elements that the moderate leadership could not always control. Against Powderly's wishes, local unions or assemblies associated with the Knights launched a series of strikes. In 1885, striking railway workers forced the Missouri Pacific, a link in the Gould system, to restore wage cuts and recognize their union. But the victory was a temporary one. In the following year, a strike on another Gould road, the Texas and Pacific, was crushed, and the power of the unions in the Gould system was broken. By 1890, the membership of the Knights had shrunk to 100,000. A few years later, the organization disappeared altogether.

The AFL

Even before the Knights had entered on their period of decline, a rival organization based on an entirely different organizational concept had appeared. In 1881, representatives of a number of craft unions formed the Federation of Organized Trade and Labor Unions of the United States and Canada. Five years later, this body took the name it has borne ever since, the American Federation of Labor (AFL). Under the direction of its president and guiding spirit, Samuel Gompers, the Federation soon became the most important labor group in the country. As its name implies, it was a federation or association of national trade unions, each of which enjoyed essential autonomy within the larger organization. Rejecting the idea of individual membership and the corollary of one big union for everybody, the Federation was built on the principle of the organization of skilled workers into craft unions. Unlike the Knights, the AFL was generally hostile to organizing unskilled workers, who did not fit within the structure of the craft unions. The AFL also resisted organizing women (many of whom, of course, were unskilled workers, but some of whom worked in AFL-represented crafts); the Knights, in their openness to all, had included substantial numbers of woman members.

The program of the Federation differed as markedly from that of the Knights as did its organizational arrangements. Gompers and his associates accepted the basic premises of capitalism; their purpose was simply to secure for labor a greater share of capitalism's material rewards. Repudiating all notions of fundamental alteration of the existing system or long-range reform measures or a separate labor party, the AFL concentrated on labor's immediate objectives: wages, hours, and working conditions. While it hoped to attain its ends by collective bargaining, the Federation was ready to employ the strike if necessary.

As one of its first objectives, the Federation called for a national eight-hour day. It set May 1, 1886, as the date by which the goal was to be achieved, and it determined that the AFL would stage a general strike if that was what was necessary to achieve it. On the target day, strikes and demonstrations for a shorter workday took place all over the country. Although the national officers of the Knights of Labor had refused to cooperate in the movement, some local units joined in the demonstrations. So did a few unions that were dominated by European radicals who wanted to destroy "class government" by terroristic methods and that were affiliated with the so-called Black International. The most sensational demonstrations occurred in Chicago, which was a labor stronghold and a center of radicalism.

A strike was already in progress in Chicago at the time, at the McCormick Harvester Company; and when the police harassed the strikers, labor and radical leaders called a protest meeting at the Haymarket Square. During the meeting, the police appeared and commanded those present to disperse. Someone— the person's identity was never determined—threw a bomb that resulted in the death of seven policemen and injury to sixty-seven others. The police, who on the previous day had killed four strikers, fired into the crowd and killed four more people. News of the Haymarket affair struck cold fear into Chicago and the business community of the nation. Blinded by hysteria, conservative, property-conscious Americans demanded a victim or victims—to demonstrate to labor that it must cease its course of violence. Chicago officials finally rounded up eight anarchists and charged them with the murder of the policemen, on the grounds that they had incited the individual who hurled the bomb. In one of the most injudicious trials in American history, all were found guilty. One was sentenced to prison and seven to death. Of the seven, one cheated his sentence by committing suicide, four were executed, and two had their sentences commuted to life imprisonment.

Neither the AFL nor the Knights of Labor had anything to do with the Haymarket bombing or even with the conflicts leading up to it. Yet both organizations found themselves saddled with much of the blame for the episode. The Knights, in particular, never recovered from the widespread vilification they encountered in the aftermath of the bombing. To most middle-class Americans, however, the significance of Haymarket was larger than the guilt or innocence of particular labor organizations. It was a sign, they believed, of how widespread the chaos of their society had become, a sign of the proliferation of radicalism. "Anarchism," most of whose adherents were relatively peaceful visionaries dreaming of a new social order, became in the public mind a code word for terrorism and violence; and for the next thirty years, the specter of anarchism remained one of the most frightening concepts in the American imagination.

The Homestead Strike

Some of the most violent strikes in American labor history occurred in the economically troubled 1890s. Two of the strikes, the one at the Homestead plant of the Carnegie Steel Company in Pennsylvania and the one against the Pullman Palace Car Company in the Chicago area, took place in companies controlled by men who prided themselves on being among the most advanced of American employers: Andrew Carnegie, who had written magazine articles defending the rights of labor, and George M. Pullman, who had built a "model town*' to house his employees.

The Amalgamated Association of Iron and Steel Workers, which was affiliated with the American Federation of Labor, was the most powerful trade union in the country. Its members were skilled workers, in great demand by employers and thus able to exercise significant power in the workplace. Employers sometimes called these skilled workers "little shopfloor autocrats," and in some plants the workers had won substantial control over the conditions under which they labored. The union had a rulebook with 56 pages of what it called "legislation," designed to limit the power of employers.

In the mid-1880s, however, the steel industry was changing in ways that threatened the power of the union. Demand for skilled workers was in decline as new production methods and new, large-scale corporate organizations streamlined the steelmaking process. The union was unable to establish a foothold in most of the Carnegie plants, which were coming to dominate the industry. In only one of the three major steel mills in the Carnegie system—the Homestead plant near Pittsburgh—was the union a force. By 1890, Carnegie and his chief lieutenant, Henry Clay Frick, had decided that the Amalgamated "had to go," even at Homestead. Over the next two years, they worked to undermine the union by announcing a series of wage cuts at Homestead. At first, the union acquiesced, aware that it was not strong enough to wage a successful strike. But in 1892, the company refused even to discuss its decisions with the Amalgamated, in effect denying the union's right to exert any influence at all on corporate policy. Carnegie was in Scotland, and the direction of the company was in the hands of Frick, who was determined to break the union once and for all.

Trouble began when the management announced a new wage scale that would have meant cuts for a small minority of the workers. Frick gave the union two days to accept the proposal; and when the union refused and called instead for a strike, he abruptly shut down the plant and asked the Pinkerton Detective Agency to furnish 300 guards to enable the company to resume operations on its own terms—by hiring nonunion workers. (The Pinkerton Agency was in reality a strikebreaking concern.)

The hated Pinkertons, whose mere presence was often enough to incite workers to violence, approached the plant on barges in an adjacent river. Warned of their coming, the strikers met them at the docks with guns and dynamite, and a pitched battle ensued on July 6,1892. After several hours of fighting, which brought death to three guards and ten strikers and severe injuries to many participants on both sides, the Pinkertons surrendered and were escorted roughly out of town. The company and local law officials then asked for militia protection. The Pennsylvania governor responded by sending the state's entire National Guard contingent, some 8,000 troops, to Homestead. Public opinion, at first sympathetic to the strikers, turned against them when a radical made an attempt to assassinate Frick. Production resumed, with strikebreakers now protected by troops. Slowly workers drifted back to their jobs; and finally—four months after the strike began—the Amalgamated surrendered. Carnegie, hearing the news in Europe, sent a wire to Frick: "Life is worth living again."

The story of the Amalgamated in the aftermath of the Homestead strike was a dismal one. By 1900, every major steel plant in the Northeast had broken with the union, which now had virtually no power to resist. Its membership shrank from a high of 24,000 in 1891 (two-thirds of all eligible steelworkers) to fewer than 7,000 a decade later.

The Pullman Strike

A dispute of greater magnitude and equal bitterness, although involving less loss of life, was the Pullman strike in 1894. The Pullman Palace Car Company constructed sleeping and parlor cars, which it leased to most of the nation's railroads. It manufactured and repaired the cars at a plant near Chicago. There the company had built the 600-acre town of Pullman and rented dwellings to the employees. George M. Pullman, inventor of the sleeping car and owner of the company, liked to exhibit his town as a model solution of the industrial problem and to refer to the workers as his "children."

Nearly all of the workers were members of a militant labor organization, the American Railway Union, recently organized by Eugene V. Debs. Debs had once been active in the Railroad Brotherhoods an older railworkers' union affiliated with the AFL. But he had become impatient with the union's lack of interest in the lot of the unskilled workers and had formed his own union, which soon attained a membership of 150,000, mainly in the Middle West.

The strike at Pullman began during the winter of 1893-1894, when the company slashed wages through five separate reductions, by an average of 25 percent. With revenues reduced by depression conditions, there was some reason for the company's action; but the cuts were more drastic than the workers could accept. Several of them who served on a committee to protest the cuts were discharged. At the same time, Pullman refused to reduce rents in its model town, even though the charges there were 20 to 25 percent higher than for comparable accommodations in surrounding areas. The strikers appealed to the Railway Union for support, and that organization voted to refuse to handle Pullman cars and equipment.

The General Managers' Association, representing twenty-four Chicago railroads, prepared to fight the boycott. Switchmen who refused to handle Pullman cars were discharged. Whenever this happened, the union instructed its members to quit work. Within a few days thousands of railroad workers in twenty-seven states and territories were on strike, and transportation from Chicago to the Pacific coast was paralyzed.

Ordinarily, state governors responded readily to appeals from strike-threatened business; but the governor of Illinois, John P. Altgeld, was different-a man with demonstrated sympathies for workers and their grievances. Altgeld had pardoned the Hay-market anarchists remaining in prison, and he had made it clear he would not call out the militia to protect employers now. Bypassing Altgeld, the railroad operators asked the federal government to send regular army troops to Illinois. At the same time, federal postal officials and marshals were bombarding Washington with complaints that the strike was preventing the movement of mail on the trains. President Grover Cleveland, a man with a punctilious regard for the letter of the law responded favorably to such requests. His attorney general, Richard Olney, a former railroad lawyer and a bitter foe of labor, was even more eager to accommodate the employers. Cleveland and Olney decided that the government could employ the army to keep the mails moving; and in July 1894, the president, over Altgeld's objections, ordered 2,000 troops to the Chicago area.

At Olney's suggestion, government lawyers obtained from a federal court an order restraining Debs and other union officials from interfering with the interstate transportation of the mails. This "blanket injunction" was so broad that it practically forbade Debs and his associates to continue the strike. They ignored the injunction and were arrested, tried for contempt of court (without a jury), and sentenced to six months in prison. With federal troops protecting the hiring of new workers and with the union leaders in a federal jail, the strike quickly collapsed.

It left a bitter heritage. It convinced many laborers that the government was not a neutral arbiter representing the common interest but a supporter of one side alone. Debs emerged from prison a martyr in the eyes of workers, a convert to Marxian socialism, and a dedicated enemy of capital.

Sources of Labor Weakness

The last decades of the nineteenth century were years in which labor, despite its organizing efforts, made few real gains. Industrial wages rose, but not enough even to keep up with the rising cost of living. Labor leaders won a few legislative victories—the abolition by Congress in 1885 of the Contract Labor Law; the establishment by Congress in 1868 of an eight-hour day on public works projects and in 1892 of the same workday for government employees; and a host of state laws governing hours of labor and safety standards. But most such laws were not enforced. Labor organizations emerged and staged strikes and protests, but the end of the century found most workers with less political power and less control of the workplace than they had had forty years before. Historians have explained this failure in numerous ways. One explanation stresses the nature of the labor unions themselves, which never succeeded in organizing more than a small percentage of the industrial work force. Only about 4 percent of all American workers (fewer than 1 million) were union members in 1900. What members there were came largely from a few sectors of the economy where skilled labor remained important. The great mass of unskilled laborers, who were emerging as the core of the industrial work force, were not represented by any union. The AFL, the most important labor organization in the country, was particularly weak. It excluded many potential members—women, blacks, recent immigrants, and others—who might have contributed to its strength. Women responded in 1903 by forming their own organization, the Women's Trade Union League, but the WTUL agitated primarily for legislation to protect woman workers, not for the organization and mobilization of labor. Divisions within the work force contributed to this weakness. Tensions among different ethnic and racial groups kept laborers divided and frustrated many efforts to mobilize against employers.

A second source of labor weakness was the shifting nature of the work force. Many immigrant workers came to America intending to remain only briefly, to earn some money and return home. Although some of these workers ultimately did stay in the United States permanently, the assumption that they had no long-range future in the country eroded their willingness to organize. Other workers—natives and immigrants alike—were in constant motion, moving from one job to another, one town to another, seldom in one place long enough to establish any sort of stake or exert any real power. A study of Newburyport, Massachusetts, over a thirty-year period shows that 90 percent of the workers there vanished from the town records in those years, many of them presumably because they moved elsewhere.

Even workers who stayed put often did not remain in the same job for long. The rags-to-riches stories of the Horatio Alger novels had few counterparts in reality. But a certain amount of real social mobility did exist, and it served to undercut worker militancy. In the course of a generation, workers or their offspring might advance a step or two up the ladder—from unskilled to semiskilled worker, from skilled worker to foreman. The gains were small, but they were often enough to keep hope alive and to limit discontent.

Above all, perhaps, workers made few gains in the late nineteenth century because of the strength of the forces arrayed against them. They faced corporate organizations of vast wealth and power, which were generally determined to crush any efforts by workers to challenge their prerogatives. Moreover, as the Homestead and Pullman strikes suggest, the corporations had the support of government—local, state, and federal—which was willing to send in troops to "preserve order" and crush labor uprisings on demand. The corporations also managed to control and intimidate their employees through an elaborate system of infiltration and espionage within working-class communities.

Despite the creation of new organizations, despite a wave of strikes and protests that in the 1880s and 1890s reached startling proportions, workers in the late nineteenth century failed on the whole to create successful organizations or to protect their interests in the way the large corporations managed to do. In the battle for power within the emerging industrial economy, the workers steadily lost ground as big business entrenched itself.